Anti-DEI Augmented: Appeal to Overturn Trump Executive Order Rejected

10 February 2026

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By Jack Grogan-Fenn

A challenge to US President Donald Trump’s high-profile executive orders against diversity, equity and inclusion (DEI) programmes has been rejected by an appeals court.

The Virginia-based 4th US Circuit Court of Appeals’ three-judge panel unanimously overturned an injunction that would have prevented Trump’s administration from implementing DEI-focused executive orders introduced shortly after Trump started his second term as US President. The two executive orders terminated federal DEI programmes, positions and mandates, resulting in hundreds of layoffs for federal employees.

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Key Client Takeaways:

Appeals Court Upholds Anti-DEI Orders

• The US 4th Circuit rejected a challenge to Trump’s anti‑DEI executive orders, allowing the administration’s termination of federal DEI programmes to proceed.

Expanding Anti‑DEI Enforcement

• Federal agencies and Republican‑led states look set to further escalate scrutiny of corporate DEI practices, using tools like fraud law, contracting rules and discrimination investigations.

Companies Face Heightened Pressure

• Political risks related to DEI has led to some businesses reducing public disclosures or abandoning programmes under pressure. However, some are sticking with such initiatives, while shareholder support for anti‑DEI proposals remains low.

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A legal opinion from an Obama-appointed judge stated that the plaintiffs were unable to prove that their right to free speech had been breached by either of Trump’s anti-ESG executive orders. “We’re presented today with a facial challenge to two Executive Orders concerning certain DEI programming, not the legality or termination of any particular DEI program,” Chief Judge Albert Diaz wrote. “That makes all the difference.”

However, Diaz noted qualms about programmes being “terminated by keyword”, as well as “valuable grants gutted in the dark”. DEI has indeed become a keyword turned into a bogeyman by Trump and other right-leaning policymakers and politicians. Since Trump regained the Presidency, he has led fellow Republicans in continued attacks against ESG, setting out his intentions with two anti-DEI executive orders issued within a day of Trump taking Presidential office for a second time.

The executive order entitled ‘Ending Radical And Wasteful Government DEI Programs And Preferencing’, introduced the day of Trump’s January 2025 inauguration, requires federal agencies or companies with government contracts to terminate DEI programmes and “not under any circumstances consider DEI or DEIA factors, goals, policies, mandates, or requirements”. Meanwhile, the ‘Ending Illegal Discrimination and Restoring Merit-based Opportunity’ executive order introduced the following day ordered all federal agencies to cease their DEI-related activities and practices, as well as “enforce our longstanding civil-rights laws and to combat illegal private-sector DEI preferences, mandates, policies, programs, and activities”.

Efforts led by Trump and his administration were prominent throughout 2025 and have continued into 2026. Last month, the US Department of Justice (DOJ) launched a new assault on DEI in setting out plans to apply fraud law as a further disincentive to companies applying such policies, as reported by Minerva Analytics. Under the stewardship of the Trump administration, the department is reportedly set to argue that considering diversity when hiring while having a federal contract is effectively fraud against the government, with Alphabet’s Google and Verizon Communications among the companies to have received demands for documents and information about their workplace programmes.

US Department of War Secretary Pete Hegseth pledged to take a “sledgehammer” to DEI programmes, outlining plans to review more than 4,300 companies participating in a federal contracting scheme that aims to support small business owners that face socially and economically disadvantaged circumstances. Texas’ Attorney General Ken Paxton declared in a recently released legal opinion that DEI policies, programmes and more than 100 “woke” state laws are “unconstitutional”, as reported by Minerva Analytics. Under Paxton’s leadership, Texas targeted DEI and ESG on several fronts last year and have continued to do so this year.

Attacks on DEI look certain to continue for most of this year, with November’s mid-term elections the next major opportunity to enact a change in course for policymakers and regulators should Democrats wrestle control of the House of Representatives and Senate from the Republicans. If there is a ‘blue wave’ as some have forecast, it would make it more challenging for Trump to continue his rampant anti-ESG agenda.

Under the Trump administration, the US government and Republican-run states have put pressure on private companies to cut back their DEI-related programmes and policies. In the face of this pressure, shareholders have seemingly stood strong on DEI, with anti-DEI proposals during the 2025 proxy season failing to secure any meaningful support, as have some firms like Costco and Apple, as reported by Minerva Analytics. However, some companies have capitulated, including Amazon, Disney, Meta, Rolls Royce and Target.

Last week, the Human Rights Campaign’s Corporate Equality Index registered a 65% plummet in participation of Fortune 500 companies willing to disclose their equity practices. Just 131 Fortune 500 firms contributed to the 2026 index, down from 377 in 2025, with many Fortune 500 companies holding some form of federal contract. While this does not necessarily mean that companies have culled DEI programmes and policies, with it being unlikely that almost 250 firms have cancelled such initiatives in the space of a year. However, it does illustrate the DEI-related tightrope faced by companies, with some likely maintaining such policies but not wishing to draw ire from the US right-wing and others pulling back but not wanting to come into criticism from the many members of the public, some shareholders or left-wing politicians.

Government pressure on companies driven by DEI also includes allegations of discrimination against white employees by sportswear giant Nike. Last week, the US Equal Employment Opportunity Commission demanded records from the company for the last eight years, including Nike’s use of ethnicity and race data and if this impacted on executive pay decisions. According to court documents, claims that the company had engaged “in a pattern or practice of disparate treatment against white employees, applicants, and training program participants” are being investigated. In a new subpoena request, the commission claimed that Nike had not fully respond to requests seeking disclosures on the firm’s hiring, training and promotion practices, as well as hiring targets for minorities. Nike insists that it has followed all anti-discrimination laws.

A federal US district court last week dismissed a similar discrimination lawsuit filed by then-Attorney General of Missouri Andrew Bailey against Starbucks last year which alleged that the company’s DEI policies had unlawfully discriminated against white, male and heterosexual employees. According to the ruling, the allegations were unable to “establish that discrimination actually took place”.

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Last Updated: 10 February 2026